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Recent workplace sexual harassment and assault allegations—such as those against Hollywood film executive Harvey Weinstein—have put employment confidentiality and nondisclosure agreements (NDAs) under the microscope. Can such agreements go too far by keeping victims silent?

Employment attorneys told SHRM Online that agreements can be used to limit legal claims, but some workplace rights can't be waived. Businesses that use overly restrictive nondisclosures run the risk of such agreements being deemed unenforceable.

In a New York Times investigation that uncovered widespread sexual harassment allegations against Weinstein, some accusers said that they were silenced by the terms of NDAs and confidential settlements.

Businesses commonly have new hires sign NDAs to protect trade secrets, confidential business information and items like customer lists, explained Douglas Brayley, an attorney with Ropes & Gray in Boston. However, it is more common to see confidentiality agreements at the end of the employment relationship in combination with a severance package, he said.

"Pre-employment NDAs often include broad prohibitions against comments that could harm the company's business reputation or an employee's personal reputation," said Shafeeqa Giarratani and Derek Rollins, attorneys with Ogletree Deakins in Austin, Texas, in an e-mail to SHRM Online. "However, employers seeking to use these restrictions to prevent employees from discussing illegal activities may find them unenforceable, depending upon to whom the disclosure is made."

As an example, they said, the National Labor Relations Board considers it an unfair labor practice for employers to ban workers from discussing their sexual harassment complaints among themselves. Similarly, employees must always retain the right to speak and cooperate with the Equal Employment Opportunity Commission (EEOC) and related state civil rights agencies regarding an agency investigation into discrimination claims.

Employees can't waive future claims based upon illegal activity that occurred after they signed the NDA, and depending upon the jurisdiction, courts are not likely to enforce any such agreement, Giarratani and Rollins said. "In addition, the employer risks attracting even more unwanted attention by taking an employee to court over the allegations it is trying to keep confidential."

Post-Employment Releases

Businesses will often provide a severance package to departing employees in exchange for a waiver and release of claims—including sexual harassment and other civil rights claims. Businesses generally use such agreements as part of a standard practice to curb litigation and company disparagement.

"Release agreements are much more enforceable than NDAs in this context, and have in the past been effective at waiving civil rights claims and stifling criminal charges," Giarratani and Rollins said.

Recently, however, enforceability may depend on the jurisdiction in question, they noted. For example, California prohibits the use of confidentiality provisions if the underlying facts could be prosecuted as a felony sexual offense. Other states have passed similar so-called sunshine-in-litigation laws, barring confidentiality agreements that would conceal facts related to a public hazard.

Brayley explained that criminal charges are brought by the state—not an individual—so a former employee can never waive the state's right to bring a criminal charge against an employer.

Furthermore, as with pre-employment NDAs, a severance agreement's release will be deemed unenforceable if it attempts to prevent the employee from filing a charge with the EEOC or participating in an investigation, hearing or other proceeding. In addition to the EEOC, other federal agencies also place limitations on what rights can be waived in a separation agreement.

Brayley suggests that employers state in the release that "nothing in this agreement prevents you from cooperating with a government investigation."

Legal Risks

The most likely risk that employers face when it comes to pre- and post-employment agreements is that they will be unenforceable, Brayley said.

Employers may also attract unwanted attention from state and federal agencies that want to review the company's history of NDAs and release agreements over a period of many years and potentially invalidate those agreements as well, Giarratani and Rollins said.

Brayley noted that a government agency may impose substantial penalties for noncompliance.

"Employers may also find themselves the subject of negative press as both the alleged bad actors and the efforts to hide them come to light," Giarratani and Rollins said.

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Members may download one copy of our sample forms and templates for your personal use within your organization. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRM’s permission. To request permission for specific items, click on the “reuse permissions” button on the page where you find the item.